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Detailed Practice Notes written by our Professional Support Lawyers, guiding you through the key issues in each topic.
Status - overview
Not all contracts to do work are contracts of employment (also known as a contract of service or apprenticeship), other types include contracts for services and contracts to provide the services of agency workers. The type of contract under which an individual works determines the status of that individual, ie whether he is:
a worker, or
The distinctions are important as they determine the employment rights, if any, an individual has.
Further provisions also apply to particular types of employees and/or workers which depend on the pattern of work carried out by the individual, or where the individual works. Individuals must also have the right to work in the UK.
The status of an individual will also determine if an employer is vicariously liable for acts done by that individual during the course of employment.
Employees are the most protected under employment legislation. The distinction between who is and who is not an employee is therefore important. For an individual to be an employee:
he must generally offer his own work, and
there must be mutuality of obligation
Various other criteria go towards determining status, but there is no single test. Any determination by Her Majesty's Revenue and Customs as to whether or not, for tax purposes, an individual is an employee will be persuasive but not determinative of the issue.
Different pieces of legislation contain different definitions of what constitutes an employee, so an individual may eg be an employee for the purposes of the discrimination legislation, but not under the Employment Rights Act 1996.
For more information, see Employee status.
An individual is usually identified as a worker by not being genuinely self-employed. Generally all employees are workers but not all workers are employees.
Workers also have some protection under employment legislation, but not to the same extent as employees. Some employment protections specifically extend to workers, such as the Working Time Regulations, and the right to be accompanied. Individuals who are workers for most purposes may qualify as employees under some legislation, due to differing definitions of 'employee' (most notably in the discrimination legislation), and hence acquire protection.
Agency workers may be either employees or workers, either of the agency or, less usually, of the end-user of their services. Commonly agency workers are part of a tripartite arrangement between the agency, the agency worker and the end-user, with contractual relationships only existing between the agency and the agency worker, and the agency and the end-user. The relationship between the agency and the agency worker is usually that of employer and worker, but can be that of employer and employee. In certain circumstances a contract may be implied between the end user and the agency worker. Where this occurs, the agency worker is usually found to be an employee of the end user.
For further information, see Agency worker status.
Agency workers are entitled to a number of statutory protections such as paid holiday, limits on working time, and protection from unlawful deductions from wages. Agency workers are also protected from discrimination under the equality legislation.
From October 2011, certain agency workers enjoy new rights under the Agency Workers Regulations 2010, including the right:
to be treated no less favourably than a comparable worker in relation to access to collective facilities and amenities provided by the hirer to direct hires
to be informed by the hirer of any relevant permanent vacancies within the hirer, to give the agency worker the same opportunity as a comparable worker to find permanent employment with the hirer
after 12 weeks in the same role with the same hirer, to the same basic working and employment conditions (as defined) as a direct hire
For further information, see Rights of agency workers.
Work seekers and hirers
The Employment Agencies Act 1973 (the Act) and the Conduct of Employment Agencies and Employment Businesses Regulations 2003 (the Regulations) govern the conduct of the private recruitment industry, and set minimum standards for employment agencies and employment businesses operating from premises in Great Britain (ie England, Wales and Scotland), including various provisions to protect work seekers and hirers. The Regulations apply where an employment agency or an employment business provides work-finding services to a work-seeker.
The legislation covers:
employment agencies, such as recruitment consultancies, which introduce work-seekers to employers; once taken on, the work-seeker becomes an employee of the company to whom they were introduced (this is usually known as 'permanent recruitment')
employment businesses, which arrange temporary work for work-seekers with a 'hiring company'; the temporary worker (often referred to as an 'agency worker') is paid by the agency rather than by the company to which they are supplied (usually known as 'the supply of temporary workers' or 'the supply of agency workers', with the employment business in this context, somewhat confusingly, being known as an 'employment agency')
A business may deal with both permanent recruitment and the supply of temporary workers. Its status under the Act and the Regulations will depend on which type of business it is conducting in each particular case.
For further information, see Employment agencies and employment businesses.
Casual and homeworkers
Casual workers are usually employed directly by an employer, but on an ad hoc basis. A casual worker may be an employee if:
an umbrella contract exists between assignments, or
during an individual assignment if the conditions for being an employee are met
Even if no umbrella contract exists, a casual worker may be able to add together the individual assignments, to accumulate continuity of employment, provided he was an employee during each individual assignment.
Homeworkers may be employees, workers, or even genuinely self-employed. This will determine the employment rights afforded to the individual. Some employment rights, however, may affect homeworkers differently, eg access to information and consultation during a collective redundancy exercise.
Fixed-term contracts are those which terminate either after a specific term, or on the completion of a particular task, whether or not determinable on notice.
Employees (but not workers generally) on a fixed-term contract may not be treated less favourably than comparable employees, either with regards to the terms of the contract of employment, or by being subjected to any other detriment. Where an individual on one fixed-term contract, or on a series of fixed-term contracts, is employed for four years or more, and is then re-engaged on a further fixed-term contract, the contract will (subject to certain exceptions) be commuted into a permanent one.
Under statute, the failure to renew a fixed-term contract of an employee amounts to a dismissal, making it subject to eg unfair dismissal protection.
Part time workers
All workers who work part time have the right, from the outset, not to be treated less favourably by their employer than a comparable full time worker, on the grounds of their part time status:
as regards the terms of their contract, eg in relation to:
pay, contractual sick pay, contractual maternity pay etc
access to pension schemes
leave, maternity leave, career breaks etc
other benefits, eg company cars, health insurance etc
by being subjected to any other detriment, such as pressuring them to work full time, selecting them for redundancy, or dismissing them
Unless it is inappropriate, the pro rata principle will be used in comparing the treatment of part time workers with full time workers. This means that in comparing rates of pay, the comparison will be of the effective hourly rate (ie taking into account the lower number of hours that the part time employee works), rather than of the absolute sum received per week or per month.
Employers may avoid liability for less favourable treatment if they can show that it is objectively justified.
Workers posted to a different country
The right to bring a claim in an employment tribunal in the UK depends on whether the employment tribunal has jurisdiction to hear the claim and the territorial ambit of the particular statutory protection sought.
The general principles which govern civil litigation usually apply, and there are specific provisions which apply to employment claims. Broadly these give the employee the choice of where to bring the claim. However, employment claims are also governed by the Posted Workers Directive, which gives additional protection to employees of EU member states who have been temporarily posted to another EU member state.
There are also other types of employment to which particular provisions apply:
The issues of where individuals such as pilots, sales personnel and those with global roles are based will primarily be determined by reference to the conduct of the parties, and the way in which the contract has been operated.
Seafarers, with the exception of share fishermen, are protected under much of the employment legislation. Seafarers divide into categories, including share fishermen, merchant seamen and those who are employed on board ship. Whether or not a seafarer has a particular employment right will depend on the category to which he belongs.
The Employment Rights Act 1996 distinguishes between four categories of seafarer. All except share fishermen are protected by the unfair dismissal provisions. However, the applicability of the rest of the Employment Rights Act 1996 differs between the categories.
Employment on board a ship which is registered in Great Britain is usually covered by the discrimination legislation.
Crown employees and parliamentary staff
Crown employment is employment under or for the purposes of:
a government department, or
any officer or body exercising on behalf of the Crown functions conferred by statutory provision
Parliamentary staff are those working in:
the House of Commons, who are employed by the House of Commons Commission or the Speaker of the House of Commons
the House of Lords, employed by Corporate Officer of the House of Lords.
With some exceptions, employment rights usually apply to Crown employees and parliamentary staff as they apply to ordinary employees.
Police and armed forces
A police officer is an office holder rather than an employee or worker. This difference in status leads to a difference in some of their rights. Whilst rights under the discrimination legislation are usually extended to police officers, with the Chief Constable being the nominated employer, many of the rights under the Employment Rights Act 1996, including the right not to be unfairly dismissed, are not.
Civilian workers in the police force are, however, employees.
The armed forces are Crown employees, but are nevertheless excluded from many employment protections, most notably the right not to be unfairly dismissed. The discrimination legislation does, however, largely apply to the armed forces, with some modifications.
Office holders are not employees, as their rights and duties are not defined by a contract of employment, but instead by the office that is held. Whether or not an individual is an office holder can be determined by consideration of a number of facts, including whether the individual exercises the function of an independent office or is subject to the control of the employer. Common examples are company directors and members of the clergy.
Office holders can also be employees, as may often be the case for directors. This does not prevent the director from being removed from office, but does give the director some security as an employee.
Office holders do have some protection against discrimination, provided they meet the definition of 'office holder' under that legislation, but are not protected from unfair dismissal.
Partners, barristers and advocates
Partners are not usually employees, they are self-employed. Salaried partners, however, are usually employees.
Barristers, in England and Wales, and advocates in Scotland are also self-employed.
Partners, barristers and advocates enjoy some protection under the discrimination legislation but, as they are not employees, are not protected from unfair dismissal.
Consultants are self-employed, and therefore do not enjoy any of the employment protection rights. Consultancy arrangements, however, sometimes create an employment relationship unintentionally, and should therefore be carefully managed. Consultants may, however, also enjoy some protection from suffering a detriment under the whistleblowing provisions of the Employment Rights Act 1996.
At common law, an employer is liable for the tortious acts of employees committed in the course of their employment. In addition, certain statutory torts impose liability on employers for acts carried out by their employees, most notably in discrimination.
Where the statute itself does not provide for an employer to be liable for unlawful acts by employees, the common law test may nevertheless impose liability, eg under the Protection from Harassment Act 1997.
Employers are only vicariously liable for acts of employees. However, who is considered to be an employee may depend on the circumstances, eg a nightclub was held to be vicariously liable for the actions of a doorman, even though the doorman was provided by a third party.
For further details on this topic, see Employed or self-employed checklist.
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